4. To reduce inequalities in land ownership.

LAND ECONOMICS AND 5. To support sustainable land management.

LOCATION THEORY 6. To regulate land use through planning and
zoning.
MODULE-01 7. To improve agricultural productivity and
Economic Concepts of Land — 10 Points land efficiency.
1. Land is a basic factor of production along 8. To guide urban and regional development.
with labor, capital, and entrepreneurship.
9. To analyze demand and supply of land.
2. In economics, land includes all natural
resources such as water, forests, 10. To support environmental conservation
minerals, and climate. and resource protection.

3. Land is a free gift of nature and not

produced by humans. Scope of Land Economics — 10 Points
4. Supply of land is fixed and cannot be 1. Study of residential, commercial,
increased. industrial, and agricultural land use.
5. Land is immovable and location-specific. 2. Analysis of land valuation and property
6. Land is heterogeneous because fertility markets.
and value differ from place to place. 3. Study of urban growth and real estate
7. Land has durability and permanent development.
existence. 4. Study of agricultural land productivity and
8. Demand for land is derived from its various tenancy systems.
uses like housing, industry, and 5. Examination of land reforms and land
agriculture. policies.
9. Land generates economic rent and 6. Study of land taxation and land
property value. acquisition.
10. Land plays an important role in urban 7. Analysis of environmental impacts of land
planning, agriculture, infrastructure, and use.
economic development.
8. Planning of transport corridors and
infrastructure development.
Objectives of Land Economics — 10 Points 9. Study of sustainable and ecological land
1. To ensure efficient utilization of land management.
resources. 10. Application in urban planning, regional
2. To study land value and rent. planning, and housing development.

3. To promote balanced economic Relevance of Land Economics for Spatial

development. Planning — 10 Points

1
 1. Helps in efficient allocation of land for 4. Principle of Demand and Supply
different uses such as residential, Land value and use depend on demand
commercial, industrial, and recreational and availability of land.
purposes.
5. Principle of Competition
2. Supports zoning and land-use regulation Different land uses compete for the same
to reduce land-use conflicts. land, especially in urban areas.

3. Assists in balanced urban and regional 6. Principle of Rent

development. Land closer to economic activities usually
earns higher rent.
4. Helps planners understand land values
This is explained in Ricardo’s Rent Theory
and real estate markets.
and Bid-Rent Theory.
5. Guides infrastructure planning such as
7. Principle of Substitution
roads, transport corridors, and public
One land use may replace another if it
utilities.
gives better economic returns.
6. Promotes sustainable use of natural
8. Principle of Productivity
resources and environmental
Land use should maximize economic
conservation.
productivity and efficiency.
7. Helps prevent urban sprawl and
9. Principle of Balance
uncontrolled development.
Balanced allocation of land is necessary
8. Supports housing planning and affordable between residential, industrial,
land distribution. agricultural, and recreational uses.

9. Assists in identifying suitable locations for 10. Principle of Sustainability

industries and public facilities. Land use must protect environmental
resources and ensure long-term
10. Integrates economic efficiency, social development without ecological
equity, and environmental sustainability in degradation.
spatial planning.
Economic Rent — 10 Points
Economic Principles of Land Use — 10 Points
1. Economic rent refers to the income earned
1. Principle of Highest and Best Use from land due to its ownership and
Land should be used for the purpose that scarcity.
provides maximum economic return and
utility. 2. It is the payment made for the use of land
and natural resources.
2. Principle of Accessibility
Land with better access to roads, markets, 3. According to David Ricardo, rent arises
and transport has higher value and because land differs in fertility and
intensive use. productivity.

3. Principle of Location 4. Land with higher fertility or better location

Location strongly influences land value earns higher rent.
and type of development.
5. Economic rent is influenced by demand
and supply of land.

2
 6. Urban land near markets and transport 1. Market mechanism refers to interaction
corridors generally has higher rent. between demand and supply in the land
market.
7. Bid-Rent Theory explains how land rent
changes with distance from the city 2. It determines land prices and allocation of
center. land uses.

8. Commercial areas usually generate higher 3. High demand increases land value and
rent than residential or agricultural land. development intensity.

9. Economic rent influences land-use 4. Land is usually allocated to the use giving
decisions and urban development maximum economic return.
patterns.
5. Competition among users influences land
10. Land taxation and planning policies affect distribution.
economic rent and land markets.
6. Commercial activities occupy highly
2. Land Use and Land Values — 10 Points accessible locations because they can
pay higher prices.
1. Land value means the economic worth or
price of land. 7. Residential and industrial areas develop
according to affordability and
2. Different land uses create different land
accessibility.
values.
8. Market forces often encourage urban
3. Commercial land generally has higher
expansion and land speculation.
value than agricultural land.
9. Government intervention through zoning
4. Location is the most important factor
and planning regulates market forces.
affecting land value.
10. Market mechanism strongly influences
5. Accessibility to roads, transport, and
urban structure and regional
markets increases land value.
development.
6. Infrastructure development raises
surrounding land prices.
4. Land Use Pattern — 10 Points
7. Demand for housing and industries affects
land values. 1. Land use pattern refers to spatial
arrangement of different land uses in an
8. Government policies like zoning influence
area.
land values.
2. It includes residential, commercial,
9. Environmental quality and public
industrial, agricultural, and recreational
amenities increase land prices.
uses.
10. Land values influence urban growth and
3. Land use patterns are influenced by
spatial development patterns.
economic, social, and environmental
factors.

3. Market Mechanism — 10 Points 4. Accessibility and transportation strongly

affect land-use distribution.

3
 5. Commercial activities usually concentrate • Roads
near city centers.
• Water supply
6. Residential areas develop around
workplaces and transport routes. • Drainage

7. Industrial land uses prefer locations with • Electricity

better connectivity and larger land
• Sewage systems
parcels.
7. Approval and Regulation
8. Government zoning regulations shape
Development plans require approval from
land-use patterns. planning authorities and must follow
9. Rapid urbanization changes traditional zoning and building regulations.
land-use patterns.
8. Construction and Development
10. Proper land-use patterns are essential for Buildings, industries, housing, and public
sustainable and efficient spatial planning. facilities are constructed according to the
approved plan.

MODULE-02 9. Marketing and Land Allocation

Process of Land Development — 10 Points Developed land or plots are sold, leased,
or allocated for different uses.
1. Land Identification
Suitable land is identified based on 10. Management and Maintenance
location, accessibility, demand, and Authorities ensure maintenance of
planning requirements. infrastructure, services, and sustainable
land use after development.
2. Land Acquisition
Land is purchased or acquired by Cost of Development — 10 Points
government or private developers for
1. Land Acquisition Cost
development purposes.
Cost involved in purchasing or acquiring
3. Survey and Site Analysis land for development purposes.
Physical features such as topography, soil,
2. Survey and Planning Cost
drainage, and existing land use are
Expenses for site surveys, mapping,
studied.
design, and preparation of development
4. Preparation of Development Plan plans.
Planners prepare layouts, zoning plans,
3. Infrastructure Development Cost
and infrastructure proposals for the site.
Includes construction of:
5. Land Subdivision
• Roads
Large land parcels are divided into smaller
plots for residential, commercial, or • Water supply
industrial use.
• Drainage
6. Provision of Infrastructure
Basic infrastructure is developed, • Electricity
including:
• Sewage systems

4
 4. Construction Cost 4. Private Investors
Cost of building residential, commercial, Developers raise funds from private
industrial, or public structures. investors or business partners.

5. Labor Cost 5. Venture Capital and Equity Funding

Wages paid to workers, engineers, Investors provide capital in return for
architects, and contractors involved in ownership share or profit participation.
development.
6. Public-Private Partnerships (PPP)
6. Material Cost Government and private sector jointly
Expenses for construction materials such finance development projects.
as cement, steel, bricks, and machinery.
7. Debentures and Bonds
7. Administrative and Legal Cost Developers raise money by issuing bonds
Includes approval fees, registration or debentures in financial markets.
charges, taxation, and legal
8. Advance Payments from Buyers
documentation.
Developers collect booking amounts and
8. Transportation and Accessibility Cost installment payments from customers
Cost of improving connectivity through before project completion.
roads, transport facilities, and parking
9. Foreign Direct Investment (FDI)
infrastructure.
Foreign companies and investors invest in
9. Environmental and Social Cost large real estate and infrastructure
Expenses related to environmental projects.
protection, rehabilitation, compensation,
10. Government Subsidies and Grants
and pollution control measures.
Government provides financial support for
10. Maintenance and Operational Cost affordable housing and infrastructure
Long-term cost for maintaining development.
infrastructure, utilities, and public
services after development.
Financial Calculations for Private Developers —
Sources of Finance for Private Developers — 10
10 Points
Points
1. Cost Estimation
1. Personal Capital
Calculation of total project cost including
Developers use their own savings or
land, labor, materials, and infrastructure.
investments to start projects.
2. Revenue Estimation
2. Bank Loans
Expected income from sale or lease of
Commercial banks provide loans for land
developed property is calculated.
purchase and construction activities.
3. Profit Calculation
3. Housing Finance Institutions
Profit = Total Revenue − Total Development
Specialized institutions provide finance for
Cost.
real estate and housing projects.
4. Return on Investment (ROI)
Measures profitability of investment.

5
ROI=\frac{Net\ Profit}{Total\ Investment}\times100 Salient Characteristics of Real Property — 10
Points
5. Break-Even Analysis
Determines the point where total cost 1. Immobility
equals total revenue. Real property cannot be moved from one
place to another because land is fixed in
6. Cash Flow Analysis
location.
Studies inflow and outflow of money
during project development. 2. Permanence
Land and attached structures are durable
7. Net Present Value (NPV)
and long-lasting assets.
Calculates present value of future profits
to evaluate project feasibility. 3. Uniqueness
Every property is unique due to differences
8. Internal Rate of Return (IRR)
in location, size, accessibility, and
Measures expected rate of return from the
surroundings.
project investment.
4. Heterogeneity
9. Loan Repayment Calculation
No two parcels of land are exactly
Developers calculate interest, installment
identical in quality or value.
amount, and repayment schedule for
borrowed funds. 5. Limited Supply
Land is limited in quantity and cannot be
10. Risk and Feasibility Analysis
increased artificially.
Financial analysis helps assess market
risks, project viability, and investment 6. High Economic Value
security. Real property has significant economic
importance and generates rent, income,
Real Property and Its Salient Characteristics
and investment returns.
Meaning of Real Property
7. Bundle of Rights
Real property refers to land and everything Ownership includes rights such as:
permanently attached to it. It includes:
• Right to use
• Land surface
• Right to lease
• Buildings
• Right to sell
• Roads
• Right to transfer property
• Trees
8. Influence of Location
• Water bodies Location greatly affects property value and
development potential.
• Permanent structures
9. Government Regulation
• Rights associated with ownership of land Real property is controlled by laws related
to zoning, taxation, land use, and building
Real property is immovable in nature and has
regulations.
economic, legal, and social value.

6
 10. Appreciation in Value 9. Government regulations affect property
Real property often increases in value over markets
time due to urbanization, infrastructure, Taxes, zoning laws, and building
and economic growth. regulations create market distortions.

10. Speculation and unequal access create

imperfections
Land hoarding and speculative
investments can increase prices and
MODULE-03 reduce affordability.
1. Heterogeneity and Imperfections of Real
Property — 10 Points
2. Valuation of Real Property – Principles and
1. Heterogeneity means uniqueness of
Practices — 10 Points
property
Every parcel of land differs in size, shape, Meaning
location, fertility, and accessibility.
Valuation of real property is the process of
2. No two properties are identical estimating the economic value of land and
Even neighboring plots may have different buildings.
values and uses.
It is important for:
3. Location differences create variation
Properties in city centers usually have • Buying and selling,
higher value than peripheral areas. • Taxation,
4. Physical characteristics vary
• Mortgage loans,
Topography, soil quality, drainage, and
environmental conditions differ from • Compensation,
place to place.
• Urban planning.
5. Legal conditions differ
Ownership rights, zoning regulations, and
land titles may vary between properties. Principles of Real Property Valuation
6. Market information is imperfect 1. Principle of Demand and Supply
Buyers and sellers may not have complete Property value depends on market
knowledge about property prices and demand and availability of land.
conditions.
2. Principle of Highest and Best Use
7. Real estate markets are localized Land value is based on the most profitable
Land value depends heavily on local and legally permitted use.
demand and economic conditions.
3. Principle of Location
8. Immobility creates market Better accessibility and infrastructure
imperfections increase property value.
Land cannot be shifted to another location
to meet demand. 4. Principle of Substitution
A buyer will not pay more than the cost of
acquiring a similar property.

7
 5. Principle of Anticipation 8. Excessive private ownership may cause
Value depends on expected future land speculation.
benefits and income from property.
9. Unequal land ownership can create social
and economic inequality.

Practices / Methods of Valuation 10. Private ownership requires government

regulation for balanced development.
6. Sales Comparison Method
Value is estimated by comparing similar
nearby properties.
Social Control of Land — 10 Points
7. Income Capitalization Method
1. Social control of land means government
Property value is based on expected rental
regulation of land use for public welfare.
income.
2. It ensures planned and balanced
8. Cost Method
development of land resources.
Value is calculated based on construction
cost minus depreciation plus land value. 3. Governments use zoning regulations to
control land use.
9. Development Method
Used for large projects by estimating 4. Land-use planning guides residential,
future development potential and profit. commercial, and industrial development.

10. Guidance Value / Government Valuation 5. Building regulations control density,

Government authorities fix minimum land height, and safety standards.
values for taxation and registration
purposes. 6. Social control helps prevent unplanned
urban growth and urban sprawl.
Private Ownership of Land — 10 Points
7. Environmental laws protect forests,
1. Private ownership means land is legally wetlands, and eco-sensitive areas.
owned by individuals or private
organizations. 8. Land acquisition laws allow government to
acquire land for public purposes.
2. Owners have rights to use, sell, lease, or
transfer land. 9. Social control promotes equitable access
to land and housing.
3. Private ownership encourages investment
and land development. 10. It supports sustainable development and
reduces land-use conflicts.
4. It promotes economic productivity and
efficient land use.

5. Land is treated as a valuable economic

asset under private ownership. Disposal of Land — 20 Points
6. Private ownership supports real estate 1. Disposal of land means transfer of land
and housing development. ownership or land rights from one party to
7. Owners can earn income through rent and another.
land appreciation.

8
2. It includes sale, lease, inheritance, gift, 19. Efficient land disposal improves
acquisition, and redistribution of land. infrastructure and economic
development.
3. Sale of land involves permanent transfer of
ownership for money. 20. Proper regulation of land disposal
promotes sustainable and balanced
4. Lease of land gives temporary land-use
spatial planning.
rights for a fixed period.
Land Development Charges — 10 Points
5. Inheritance transfers land ownership from
deceased owners to legal heirs. 1. Land development charges are fees
collected for developing land and
6. Land can also be transferred through gift
providing infrastructure.
or donation.
2. These charges are usually imposed by
7. Governments dispose public land through
government or planning authorities.
auctions and allotments.
3. They help recover the cost of
8. Land disposal supports residential,
infrastructure development.
commercial, and industrial development.
4. Charges are used for roads, drainage,
9. Proper land disposal helps planned urban
water supply, and electricity facilities.
growth.
5. Developers or landowners are required to
10. Legal documents such as sale deed and
pay these charges before development
registration are necessary.
approval.
11. Title verification is important to avoid land
6. Land development charges increase the
disputes.
value and usability of land.
12. Government regulates land disposal
7. Charges vary depending on location, land
through laws and policies.
use, and development intensity.
13. Zoning regulations influence land transfer
8. They support planned urban and regional
and development.
development.
14. Land acquisition allows government to
9. Development charges help reduce
obtain land for public purposes.
financial burden on local governments.
15. Redistribution of land promotes social
10. Proper collection of development charges
equity and land reforms.
improves urban infrastructure and
16. Land disposal affects land values and real services.
estate markets.

17. Speculation in land disposal can increase

Betterment Levy — 10 Points
land prices.
1. Betterment levy is a tax imposed on
18. Environmental regulations control
landowners who benefit from public
disposal in eco-sensitive areas.
infrastructure improvements.

9
 2. It is charged when land value increases 8. They help control urban sprawl and illegal
due to government development development.
activities.
9. Land use restrictions protect public
3. Examples include construction of roads, health, safety, and environment.
metro lines, parks, and public facilities.
10. They are essential for sustainable spatial
4. The levy helps government recover part of planning and urban management.
infrastructure costs.

5. It is based on increase in land value after

2. Compensation and Requisition — 10 Points
development.
1. Compensation is payment given to
6. Betterment levy discourages unearned
landowners when land is acquired by
profit from public investment.
government.
7. It promotes equitable sharing of
2. Requisition means temporary takeover of
development benefits.
land or property for public purposes.
8. The amount of levy varies according to rise
3. Governments acquire or requisition land
in property value.
for roads, railways, dams, and
9. It is an important financial tool in urban infrastructure.
planning and land management.
4. Compensation is generally based on
10. Betterment levy supports sustainable market value of land.
infrastructure financing and planned
5. Additional compensation may include
development.
rehabilitation and resettlement benefits.
1. Land Use Restrictions — 10 Points
6. Requisition is usually temporary, while
1. Land use restrictions are rules controlling acquisition is permanent.
how land can be used and developed.
7. Legal procedures are followed during land
2. They are imposed by governments and acquisition and requisition.
planning authorities.
8. Compensation protects rights of affected
3. Restrictions help ensure planned and landowners and occupants.
orderly development.
9. Delays or inadequate compensation can
4. Zoning regulations separate residential, create social conflicts and protests.
commercial, and industrial uses.
10. Proper compensation policies support
5. Building regulations control height, equitable and fair development.
density, and setbacks.

6. Environmental laws restrict development

3. Taxation of Capital Gain on Land — 10 Points
in eco-sensitive areas.
1. Capital gain is profit earned from sale of
7. Restrictions prevent incompatible land
land at a higher price than purchase cost.
uses and land conflicts.

10
 2. Government imposes tax on this increase 8. Excessive public control may reduce
in land value. private investment and efficiency.

3. Capital gains may be short-term or long- 9. Proper management of public land is

term depending on holding period. necessary to avoid misuse and corruption.

4. Taxation helps government generate 10. Public ownership plays an important role
public revenue. in sustainable and balanced spatial
planning.
5. It discourages land speculation and
excessive profiteering. Economic Aspects of Land Policies at Various
Levels of Decision Making — 10 Points
6. Capital gain tax promotes better
regulation of land markets. 1. Land policies influence economic
development
7. Tax amount depends on property value
They guide allocation and use of land for
and duration of ownership.
agriculture, housing, industries, and
8. Exemptions may be provided for infrastructure.
reinvestment in housing or infrastructure.
2. National Level Policies
9. Taxation influences investment decisions Governments frame policies related to
in real estate markets. land reforms, taxation, housing, and
infrastructure development.
10. It is an important financial tool in land
economics and urban planning. 3. State or Regional Level Policies
State authorities regulate land use, urban
development, and regional planning
4. Public Ownership of Land — 10 Points according to local needs.

1. Public ownership means land is owned 4. Local Level Decision Making

and controlled by government authorities. Municipalities and local bodies manage
zoning, building permissions, and land-
2. Public land is used for roads, parks, use control.
schools, and public infrastructure.
5. Land Value and Revenue Generation
3. Government controls land use for public Land policies affect land prices, property
welfare and planned development. taxes, and government revenue.
4. Public ownership helps prevent land 6. Investment and Economic Growth
speculation and monopolies. Proper land policies attract private
investment and support industrial and
5. It supports equitable distribution of land
urban growth.
resources.
7. Infrastructure Development
6. Governments can reserve land for
Policies help allocate land for roads,
environmental protection and public
transport corridors, public utilities, and
facilities.
economic activities.
7. Public ownership facilitates infrastructure
8. Social Equity and Land Distribution
and housing projects.
Land reforms and affordable housing

11
 policies reduce inequality in land 5. Low-income groups often live near
ownership. workplaces and city centers.

9. Environmental Sustainability 6. Availability of infrastructure affects

Land policies regulate environmentally housing development.
sensitive areas and promote sustainable
7. Environmental quality influences
development.
residential preference.
10. Conflict Management and Efficient Land
8. Public transport encourages residential
Use
expansion along corridors.
Effective policies reduce land disputes,
speculation, and unplanned urban 9. Government housing policies influence
expansion while improving spatial residential distribution.
planning.
10. Residential location shapes urban growth
and commuting patterns.
MODULE-04
Analysis of Location of Specific Uses in the Light
of Location Theories (Intra-Regional and Inter-
Industrial Location — 10 Points
Regional Context)
1. Industries prefer locations with good
transport connectivity.
Introduction
2. Availability of raw materials influences
Location theories explain why different land uses industrial location.
such as residential, industrial, commercial, and
3. According to Alfred Weber, industries
institutional activities develop in particular places.
minimize transport and labor costs.
These theories help planners understand spatial
organization, accessibility, transport cost, market 4. Heavy industries require large land parcels
relations, and economic efficiency at: and peripheral locations.

• Intra-regional level (within a city or region) 5. Access to labor supply affects industrial
development.
• Inter-regional level (between regions or
cities 6. Availability of power and water is
important for industries.
Residential Location — 10 Points
7. Industrial zones are separated from
1. Residential areas develop near residential areas through zoning.
employment centers and transport routes.
8. Ports and highways attract industrial
2. Accessibility to schools, hospitals, and clusters.
markets influences residential location.
9. Government incentives influence
3. According to Bid-Rent Theory, land value industrial location decisions.
decreases away from city center.
10. Industrial location affects regional
4. High-income groups prefer suburban and economic growth and employment.
low-density residential areas.

12
Commercial Location — 10 Points 6. Institutional areas require adequate
infrastructure and utilities.
1. Commercial activities concentrate in
highly accessible areas. 7. Population distribution influences
institutional location.
2. Central Business Districts (CBDs) are
major commercial centers. 8. Public policies guide institutional land
allocation.
3. According to Central Place Theory,
commercial centers serve surrounding 9. Institutional land use supports social
populations. welfare and public services.

4. High pedestrian and traffic movement 10. Proper institutional location improves
increase commercial importance. efficiency and regional development.

5. Commercial land usually has highest land Aspect Intra- Inter-

value in cities. Regional Regional
Location Location
6. Retail activities prefer areas with
maximum customer interaction. Meaning Refers to Refers to
location of location of
7. Transport nodes attract commercial
activities activities
development.
within a city or between
8. Availability of infrastructure supports region different
commercial growth. regions or
cities
9. Commercial activities create employment
and economic exchange. Scale Small-scale Large-scale
analysis analysis
10. Commercial location strongly influences
urban structure and land values. Main Focus Urban land- Regional
use distribution of
arrangement economic
Institutional Location — 10 Points activities

1. Institutional land use includes schools, Residential Housing near Migration

colleges, hospitals, and government Example workplaces toward
offices. and transport developed
metropolitan
2. Institutions are located for maximum
regions
public accessibility.
Industrial Industries Industries
3. Educational institutions require large and
Example near highways near ports,
peaceful environments.
and city raw materials,
4. Hospitals prefer accessible locations outskirts and major
connected by roads and transport. markets

5. Government offices usually concentrate in Commercial CBD and Major trade

administrative centers. Example neighborhood centers

13
 markets within between 5. Costs and benefits are converted into
city regions monetary values for comparison.

Institutional Schools and National 6. Discounting technique is used to

Example hospitals universities calculate present value of future costs and
inside urban and benefits.
areas institutions in
7. Net Present Value (NPV) method
important
measures difference between present
cities
benefits and present costs.
Important Accessibility, Resources,
NPV=Present\ Value\ of\ Benefits-Present\ Value\
Factors land value, regional
of\ Costs
zoning, economy,
transport connectivity, 8. Benefit-Cost Ratio (BCR) compares total
labor benefits with total costs.
availability
BCR=\frac{Present\ Value\ of\ Benefits}{Present\
Transport Daily Inter-city Value\ of\ Costs}
Role commuting trade and
9. Internal Rate of Return (IRR) measures
and local regional
expected profitability of project
movement connectivity
investment.
Planning Helps urban Helps regional
10. CBA helps planners choose projects that
Importance planning and planning and
provide maximum social and economic
zoning economic
benefits.
development

2. Social Costs and Benefits — 10 Points

Social Costs
SAME FOR MODULE 05 FROM 1. Social costs are negative impacts of
HERE development on society and environment.
1. Techniques of Cost Benefit Analysis (CBA) of 2. Includes pollution, traffic congestion,
Urban Development Programmes — 10 Points displacement, and environmental
1. Cost Benefit Analysis (CBA) is a method degradation.
used to evaluate economic feasibility of 3. Urban projects may increase noise and air
urban projects. pollution.
2. It compares total expected costs with total 4. Land acquisition may displace local
expected benefits of a project. communities.
3. Used in projects such as roads, metro 5. Social costs affect public health and
systems, housing, and infrastructure quality of life.
development.
Social Benefits
4. Identification of all project costs and
benefits is the first step.

14
 6. Social benefits are positive impacts of
development projects on society.

7. Includes employment generation and

4. Difference Between Financial and Economic
economic growth.
Analysis — 10 Points
8. Improved transport and infrastructure
Aspect Financial Economic
increase accessibility.
Analysis Analysis
9. Housing and public services improve living
conditions. Meaning Examines Examines
profitability for overall benefit
10. Social benefits contribute to overall public investor or to society
welfare and regional development. developer

Main Focus Revenue and Social costs

expenditure and social
3. Monetization of Various Costs and Benefits —
benefits
10 Points
Objective Financial Economic
1. Monetization means converting costs and
benefits into monetary values. viability welfare

2. It helps compare project impacts in Perspective Private or National or

economic terms. organizational social

3. Construction and infrastructure expenses Includes Capital cost, Environmental

are directly measurable costs. profit, revenue and social
impacts
4. Travel time savings can be converted into
monetary benefits. Concerned Cash flow and Resource
With returns efficiency and
5. Environmental damages may be valued public benefit
through compensation cost methods.
Market Uses actual Uses shadow
6. Health impacts are estimated using Prices market prices or adjusted
medical and productivity costs. prices
7. Increase in land value is considered an Example Profit from Social impact
economic benefit. housing of housing
8. Employment generation can be measured project project
through income creation. Decision Investor Public welfare
9. Discounting methods convert future Basis profitability and
values into present value. development

10. Monetization improves decision-making in Importance Helps Helps policy

urban planning and project evaluation. investment and planning
decisions decisions

15